The quantity theory of money is a fundamental economic concept that states increasing the money supply leads to proportional increases in the price level (inflation).
It's expressed through Fisher's Equation of Exchange: MV = PT, where M is money supply, V is velocity of money (how quickly money changes hands), P is the average price level, and T is total transactions or real GDP.
The theory's core assumption is that V and T remain relatively stable in the short term. Therefore, increases in M lead to proportional increases in P.
In Bangladesh, Bangladesh Bank tries to control inflation by managing the money supply — consistent with this theory's principles.